10-Q 1 d91778e10-q.txt FORM 10-Q DATED 09/30/01 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2001 ------------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------------- --------------------- Commission file number 0-17737 ------------------------------------------------------ Fiduciary Capital Partners, L.P. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 86-0653600 ----------------------- ----------------------- (State of organization) (I.R.S. Employer Identification No.) 1530 16th Street Suite 200 Denver, Colorado 80202-1306 ---------------- ---------- (Address of principal (Zip Code) executive offices) Registrant's telephone number, including area code (800) 866-7607 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No . --- --- Fiduciary Capital Partners, L.P. Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2001 Table of Contents

Page ---- Part I. FINANCIAL INFORMATION Item 1. Condensed Financial Statements (unaudited) 3 Schedule of Investments - ~~June~~September 30, 2001 3 Balance Sheets - ~~June~~September 30, 2001 and December 31, 2000 4 Statements of Operations for the three months ended ~~June~~September 30, 2001 and 2000 5 Statements of Operations for the ~~six~~nine months ended ~~June~~September 30, 2001 and 2000 6 Statements of Cash Flows for the ~~six~~nine months ended ~~June~~September 30, 2001 and 2000 7 Statements of Changes in Net Assets for the ~~six~~nine months ended ~~June~~September 30, 2001 and for the year ended December 31, 2000 8 Selected Per Unit Data and Ratios 9 Notes to Financial Statements 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 Part II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 17

2 Part I. FINANCIAL INFORMATION Item 1. Financial Statements FIDUCIARY CAPITAL PARTNERS, L.P. SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2001 (unaudited)

Principal Amount/ Investment Amortized % of Total Shares Investment Date Cost Value Investments --------- ---------- ---------- --------- ------- ----------- MANAGED COMPANIES: $1,967,040 LMC Corporation, 12.00% Senior Subordinated 11/01/96 Revolving Notes through due 10/31/00(1) 01/13/99 $1,967,040 $ 1 $41,404 LMC Corporation, 12.00% 02/07/00 Promissory Notes due through 8/7/00(2) 04/11/00 41,404 1 ---------- -------- -- --------- 2,008,444 2 0.0% ---------- -------- -- --------- Total Investments in Managed Companies (0.0% of net assets) 2,008,444 2 0.0 ~~---------- ---------- -----~~ NON-MANAGED COMPANIES: $117,460 Niigata Engineering 12/01/99 Co., Ltd., through Receivables(3) 12/10/99 ~~109~~112,~~607~~588 ~~109~~112,~~607~~588 ---------- -------- -- --------- ~~109~~112,~~607~~588 ~~109~~112,~~607~~588 100.0 ---------- -------- -- --------- 989,414 sh. ~~WasteMasters~~Environmental Energy Services, Inc., Common Stock(4)* 06/03/98 1,321,795 1 ---------- -------- -- --------- 1,321,795 1 0.0 ---------- -------- -- --------- Total Investment in Non-Managed Companies (2328.15% of net assets) 1,~~431~~434,~~402~~383 ~~109~~112,~~608~~589 100.0 ---------- -------- -- --------- Total Investments (2328.15% of net assets) $3,~~439~~442,~~846~~827 $ ~~109~~112,~~610~~591 100.0% ========== ======== == =========

(1) The accrual of interest on the notes was discontinued by the Fund effective July 1, 1999. (2) The Fund has not accrued any interest on these notes. (3) These are non-interest bearing receivables, which were purchased from LMC Corporation ("LMC") at a discount. Payments are due on November 21, 2001 in the amount of $55,639 and on May 21, 2002 in the amount of $61,821. (4) See Note 5 regarding significant issues concerning the ownership and transferability of this stock. (Environmental Energy Services, Inc. ("EESV") is a successor to WasteMasters, Inc.) * Non-income producing security. The accompanying notes to financial statements are an integral part of this schedule. 3 FIDUCIARY CAPITAL PARTNERS, L.P. BALANCE SHEETS SEPTEMBER 30, 2001 AND DECEMBER 31, 2000 (unaudited)

2001 2000 ------------- ------------- ASSETS: Investments: Portfolio investments, at value: Managed companies (amortized cost - $2,008,444 and $3,524,111, respectively) $ 2 $ 1,513,093 Non-managed companies (amortized cost - $1,~~431~~434,~~402~~383 and $1,479,063, respectively) ~~109~~112,~~608~~589 157,269 ------------- ------------- Total investments ~~109~~112,~~610~~591 1,670,362 Cash and cash equivalents ~~503~~425,~~672~~083 132,885 Accrued interest receivable 1,~~554~~091 20,765 Other assets 627,~~074~~981 24,285 ------------- ------------- Total assets $ ~~620~~566,~~910~~746 $ 1,848,297 ============= ============= LIABILITIES: Payable to affiliates $ 3629,~~012~~557 $ 4,097 Accounts payable and accrued liabilities ~~111~~142,~~188~~203 119,189 ------------- ------------- Total liabilities ~~147~~171,~~200~~760 123,286 ------------- ------------- COMMITMENTS AND CONTINGENCIES NET ASSETS: Managing General Partner (~~131~~97,~~844~~552) (178,084) Limited Partners (equivalent to $0.6553 and $2.04, respectively, per limited partnership unit based on 930,725 units outstanding) ~~605~~492,~~554~~538 1,903,095 ------------- ------------- Net assets ~~473~~394,~~710~~986 1,725,011 ------------- ------------- Total liabilities and net assets $ ~~620~~566,~~910~~746 $ 1,848,297 ============= =============

The accompanying notes to financial statements are an integral part of these financial statements. 4 FIDUCIARY CAPITAL PARTNERS, L.P. STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (unaudited)

2001 2000 ------------- ------------- INVESTMENT INCOME: Income: Interest $ 156,~~118~~915 $ 6360,~~683~~470 ------------- ------------- Total investment income 156,~~118~~915 6360,~~683~~470 ------------- ------------- Expenses: Fund administration fees 34,~~292~~293 35,~~842~~843 Administrative expenses 19,924 20,~~277~~275 Independent General Partner fees and expenses 12,060 1312,~~187~~743 Liquidation expenses 29,822 -- Professional fees 89,~~135~~065 220,~~053~~267 Other expenses 1814,~~993~~767 6428,~~092~~235 Investment advisory fees -- 22,~~450~~451 ------------- ------------- Total expenses 93119,~~404~~931 ~~157~~139,~~901~~814 ------------- ------------- NET INVESTMENT LOSS (78113,~~286~~016) (9479,~~218~~344) ------------- ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on investments (2,576) -- Net change in unrealized loss on investments 2,576 --(314,602) ------------- ------------- Net loss on investments -- --(314,602) ------------- ------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (78113,~~286~~016) $ (94393,~~218~~946) ============= =============

The accompanying notes to financial statements are an integral part of these financial statements. 5 FIDUCIARY CAPITAL PARTNERS, L.P. STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (unaudited)

2001 2000 ------------~~---~~ ------------~~---~~ INVESTMENT INCOME: Income: Interest $ 6774,~~954~~869 $ ~~130~~190,~~308~~778 ------------~~---~~ ------------~~---~~ Total investment income 6774,~~954~~869 ~~130~~190,~~308~~778 ------------~~---~~ ------------~~---~~ Expenses: Fund administration fees 69103,~~101~~394 71107,~~685~~528 Administrative expenses 3959,~~965~~889 4060,~~553~~828 Independent General Partner fees and expenses 2436,~~148~~208 2538,~~517~~260 Liquidation expenses 29,822 -- Professional fees 1524,~~792~~857 2343,~~693~~960 Other expenses 4156,~~331~~098 87115,~~264~~499 Investment advisory fees -- 4467,~~901~~352 ------------~~---~~ ------------~~---~~ Total expenses ~~190~~310,~~337~~268 ~~293~~433,~~613~~427 ------------~~---~~ ------------~~---~~ NET INVESTMENT LOSS (~~122~~235,~~383~~399) (~~163~~242,~~305~~649) ------------~~---~~ ------------~~---~~ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on investments (2,576) -- Net change in unrealized loss on investments 2,576 --(314,602) ------------~~---~~ ------------~~---~~ Net loss on investments -- --(314,602) ------------~~---~~ ------------~~---~~ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (~~122~~235,~~383~~399) $ (~~163~~557,~~305~~251) ============~~===~~ ============~~===~~

The accompanying notes to financial statements are an integral part of these financial statements. 6 FIDUCIARY CAPITAL PARTNERS, L.P. STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (unaudited)

2001 2000 -----------~~----~~ -----------~~----~~ CASH FLOWS FROM OPERATING ACTIVITIES: Net decrease in net assets resulting from operations $ (~~122~~235,~~383~~399) $ (~~163~~557,~~305~~251) Adjustments to reconcile net decrease in net assets resulting from operations to net cash used in operating activities: Accreted discount on portfolio investments (710,~~978~~959) (2433,~~692~~327) Change in assets and liabilities: Accrued interest receivable 19,~~211~~674 ~~700~~916 Other assets 18(3,~~211~~696) 17(8,~~871~~184) Payable to affiliates 3125,~~915~~460 4463,~~742~~361 Accounts payable and accrued liabilities (823,~~001)~~014 (64,~~692~~633) Net realized loss on investments 2,576 -- Net change in unrealized loss on investments (2,576) --314,602 -----------~~----~~ -----------~~----~~ Net cash used in operating activities (69181,~~025~~906) (~~131~~224,~~376~~516) -----------~~----~~ -----------~~----~~ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of portfolio investments -- (225,570) Proceeds from dispositions of portfolio investments 1,568,730 88,569 Sale of temporary investments, net -- 649,689 -----------~~----~~ -----------~~----~~ Net cash provided by investing activities 1,568,730 512,688 -----------~~----~~ -----------~~----~~ CASH FLOWS FROM FINANCING ACTIVITIES: General Partner capital contributions 4680,~~240~~532 -- Cash distributions paid to partners (1,175,158) (310,992) -----------~~----~~ -----------~~----~~ Net cash used in financing activities (1,~~128~~094,~~918~~626) (310,992) -----------~~----~~ -----------~~----~~ NET INCREASE IN CASH AND CASH EQUIVALENTS ~~370~~292,~~787~~198 70(22,~~320~~820) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 132,885 218,111 -----------~~----~~ -----------~~----~~ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ ~~503~~425,~~672~~083 $ ~~288~~195,~~431~~291 ===========~~====~~ ===========~~====~~

The accompanying notes to financial statements are an integral part of these financial statements. 7 FIDUCIARY CAPITAL PARTNERS, L.P. STATEMENTS OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND FOR THE YEAR ENDED DECEMBER 31, 2000 (unaudited)

2001 2000 -----------~~----~~ -----------~~----~~ (Decrease) increase in net assets resulting from operations: Net investment loss $ (~~122~~235,~~383~~399) $ (262,883) Net realized loss on investments (2,576) (6,049,513) Net change in unrealized loss on investments 2,576 7,002,993 -----------~~----~~ -----------~~----~~ Net (decrease) increase in net assets resulting from operations (~~122~~235,~~383~~399) 690,597 General Partner capital contributions 4680,~~240~~532 -- Distributions (1,175,158) -- Repurchase of limited partnership units -- (64,017) -----------~~----~~ -----------~~----~~ Total (decrease) increase in net assets (1,~~251~~330,~~301~~025) 626,580 Net assets: Beginning of period 1,725,011 1,098,431 -----------~~----~~ -----------~~----~~ End of period (including no undistributed net investment income) $ ~~473~~394,~~710~~986 $ 1,725,011 ===========~~====~~ ===========~~====~~

The accompanying notes to financial statements are an integral part of these financial statements. 8 FIDUCIARY CAPITAL PARTNERS, L.P. SELECTED PER UNIT DATA AND RATIOS (unaudited)

For the Three Months For the ~~Six~~Nine Months Ended ~~June~~September 30, Ended ~~June~~September 30, ----------------------------------- ----------------------------------- 2001 2000 2001 2000 --------------- --------------- --------------- --------------- Per Unit Data: Investment income $ --0.01 $ 0.06 $ 0.0607 $ 0.1319 Expenses (0.1013) (0.1514) (0.2033) (0.2943) --------------- --------------- --------------- --------------- Net investment loss (0.1012) (0.0908) (0.1426) (0.1624) Net change in unrealized loss on investments -- (0.30) -- (0.30) Distributions declared to partners ~~(1.25)~~-- -- (1.25) -- --------------- --------------- --------------- --------------- Net decrease in net asset value (10.3512) (0.0938) (1.3951) (0.1654) Net asset value: Beginning of period 20.0065 1.1910 2.04 1.26 --------------- --------------- --------------- --------------- End of period $ 0.6553 $ 10.1072 $ 0.6553 $ 10.1072 =============== =============== =============== =============== Ratios (annualized): Ratio of expenses to average net assets 34110.3145% 6475.3076% 2938.2640% 5764.5214% Ratio of net investment loss to average net assets (28104.7608)% (3843.3700)% (1829.8114)% (3135.9991)% Number of limited partnership units at end of period 930,725 1,026,273 930,725 1,026,273

The accompanying notes to financial statements are an integral part of these selected per unit data and ratios. 9 FIDUCIARY CAPITAL PARTNERS, L.P. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2001 (unaudited) 1. GENERAL The accompanying unaudited interim condensed financial statements include all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of FCM Fiduciary Capital Management Company ("FCM"), the Managing General Partner of Fiduciary Capital Partners, L.P. (the "Fund"), necessary to fairly present the financial position of the Fund as of September 30, 2001 and the results of its operations, changes in net assets and its cash flows for the period then ended. These financial statements should be read in conjunction with the Significant Accounting Policies and other Notes to Financial Statements included in the Fund's annual audited financial statements for the year ended December 31, 2000. 2. INVESTMENT ADVISORY FEES As compensation for its services as investment adviser, FCM was entitled to receive, subject to certain limitations, a subordinated monthly fee at the annual rate of 1% of the Fund's available capital, as defined in the Partnership Agreement. The investment advisory fees for 2000 were not paid during 2000 due to the failure of the Fund to satisfy the applicable subordination provisions. During March 2001, in connection with the adoption of the plan of liquidation for the Fund, FCM permanently waived its rights to receive any future investment advisory fees from the Fund, retroactive to January 1, 2000. As a result, the quarterly accruals for investment advisory fees that were made during 2000 were reversed as of December 31, 2000 and the Fund did not record any investment advisory fees during the nine months ended September 30, 2001. 3. FUND ADMINISTRATION FEES As compensation for its services as fund administrator, FCM receives a monthly fee at the annual rate of 0.45% of net proceeds available for investment, as defined in the Partnership Agreement. Fund administration fees of $103,394 were paid by the Fund for the nine months ended September 30, 2001. FCM is also reimbursed, subject to various limitations, for administrative expenses incurred in providing accounting and investor services to the Fund. The Fund reimbursed FCM for administrative expenses of $59,889 for the nine months ended September 30, 2001. 10 FIDUCIARY CAPITAL PARTNERS, L.P. NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 (unaudited) 4. INDEPENDENT GENERAL PARTNER FEES AND EXPENSES As compensation for services rendered to the Fund, each of the Independent General Partners receives from the Fund and Fiduciary Capital Pension Partners, L.P., an affiliated fund, (collectively, the "Funds") an annual fee of $30,000, payable monthly in arrears, together with all out-of-pocket expenses. Each Fund's allocation of these fees and expenses is based on the relative number of outstanding Units. Fees and expenses paid by the Fund for the nine months ended September 30, 2001 totaled $36,208. 5. COMMITMENTS AND CONTINGENCIES Environmental Energy Services, Inc. ("EESV") (as a successor to WasteMasters, Inc.) The Fund acquired its EESV stock, which trades on the OTC Bulletin Board System, from Nikko Trading of America Corporation ("Nikko") on June 3, 1998. The stock was subject to a 24-month lock-up period through May 2000. Upon expiration of the lock-up period, the Fund requested that EESV issue the Fund a new stock certificate without the restrictive legend that existed on the Fund's original certificate, so that the stock could be sold. EESV refused to comply with this request because of a court order during March 2000 that authorized the cancellation of all EESV stock that had been issued to Nikko, including the shares that Nikko had previously transferred to the Fund. The Fund retained counsel and EESV's attorneys agreed to consider the Fund's request to be treated as a bona fide purchaser of the shares from Nikko. Others are in the same position as the Fund and have requested similar treatment. On October 12, 2001, EESV agreed to treat the Fund as a bona fide purchaser of the shares and to issue new restricted shares to the Fund, subject to execution of a definitive settlement agreement. 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the Fund's unaudited Financial Statements and the Notes thereto. This report contains, in addition to historical information, forward-looking statements that include risks and other uncertainties. The Fund's actual results may differ materially from those anticipated in these forward-looking statements. While the Fund can not always predict what factors would cause actual results to differ materially from those indicated by the forward-looking statements, factors that might cause such a difference include general economic and business conditions, competition and other factors discussed elsewhere in this report. Readers are urged to consider statements that include the terms "believes", "expects", "plans", "anticipates", "intends" or the like to be uncertain and forward-looking. The Fund undertakes no obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of anticipated or unanticipated events. LIQUIDITY AND CAPITAL RESOURCES As of September 30, 2001, the Fund held portfolio investments in one Managed Company and two Non-Managed Companies, with an aggregate original cost of approximately $3.4 million. The value of these portfolio investments, which were made through the reinvestment of proceeds from the sale of other portfolio investments, represents approximately 28.5% of the Fund's net assets as of September 30, 2001. The Fund's investment period ended on December 31, 1995. Although the Fund has been permitted to make additional investments in existing portfolio companies since 1995, the Fund has not been permitted to acquire investments in new portfolio companies. Consequently, the Fund has been in a liquidation mode since 1995. As provided for in the Partnership Agreement, the Fund's term expired, and the dissolution of the Fund was effective, as of December 31, 2000. The General Partners are proceeding with the final liquidation and distribution of the Fund's assets in accordance with a plan of liquidation that was adopted by the General Partners on March 2, 2001. It is currently anticipated that the liquidation of the Fund will be completed prior to December 31, 2001. A cash distribution of $1.25 per Unit was paid to Limited Partners on May 10, 2001 and it is anticipated that the Fund will make one additional cash distribution during 2001. It is currently anticipated that this additional distribution will be less than $0.50 per Unit. In addition, it appears likely that a liquidating trust will be created to hold assets of the Fund that are not liquidated prior to December 31, 2001. It is currently anticipated that the assets to be transferred to the trust will consist primarily of the Fund's claim in the LMC bankruptcy proceedings and its EESV stock. On April 5, 2001, R.B.M. Precision Metal Products, Inc. ("RBM") (i) prepaid the $1,460,000 of RBM notes held by the Fund at par, plus accrued interest, and (ii) repurchased its common stock and warrants held by the Fund for $53,091. As of September 30, 2001, the Fund's remaining liquid assets were invested in money market funds. These funds are available to fund the 2001 repurchase offer, to pay Fund expenses and for distribution to the partners. The Fund does not anticipate making any additional follow-on investments in existing portfolio companies. 12 Pursuant to the terms of the Fund's periodic unit repurchase policy, the Fund has annually offered to purchase from its Limited Partners, up to 7.5% of its outstanding Units for an amount equal to the current net asset value per Unit, net of a fee (not to exceed 2%) to be retained by the Fund to offset expenses incurred in connection with the repurchase offer. If the number of tendered Units in any year exceeds 7.5% of the outstanding Units, the Fund's General Partners may vote to repurchase up to an additional 2% of the outstanding Units. If Units in excess of this amount are tendered, Units are purchased on a pro rata basis after giving priority to Limited Partners owning less than 100 Units. The 2001 repurchase offer was mailed to the Limited Partners on October 9, 2001. The actual redemption of Units will occur on November 21, 2001. Accrued interest receivable decreased $19,674 from $20,765 at December 31, 2000 to $1,091 at September 30, 2001. This decrease resulted primarily from the prepayment of the RBM notes as of April 5, 2001. Payables to affiliates increased $25,460 from $4,097 at December 31, 2000 to $29,557 at September 30, 2001. This increase resulted primarily from an increase in the amount of reimbursements due FCM for expenses incurred on behalf of the Fund. Accounts payable and accrued expenses increased $23,014 from $119,189 at December 31, 2000 to $142,203 at September 30, 2001. This increase resulted primarily from the accrual of an additional $29,822 of liquidation expenses during the nine months ended September 30, 2001. RESULTS OF OPERATIONS Investment Income and Expenses The Fund's net investment loss was $113,016 for the three months ended September 30, 2001 as compared to a net investment loss of $79,344 for the corresponding period of the prior year. Net investment loss per limited partnership unit increased from $0.08 to $0.12 and the ratio of net investment loss to average net assets increased from 43.00% to 104.08% for the three months ended September 30, 2001 as compared to the corresponding period of the prior year. The Fund's net investment loss was $235,399 for the nine months ended September 30, 2001 as compared to a net investment loss of $242,649 for the corresponding period of the prior year. Net investment loss per limited partnership unit increased from $0.24 to $0.26 and the ratio of net investment loss to average net assets decreased from 35.91% to 29.14% for the nine months ended September 30, 2001 as compared to the corresponding period of the prior year. The net investment loss for the three months ended September 30, 2001 increased primarily as a result of a decrease in investment income as compared to the corresponding period of the prior year. The impact of the decrease in investment income was partially offset by a decrease in total expenses. The net investment loss for the nine months ended September 30, 2001 decreased primarily as a result of a decrease in total expenses as compared to the corresponding period of the prior year. The impact of the decrease in total expenses was substantially offset by a decrease in investment income. 13 Investment income decreased $53,555 and $115,909, or 88.6% and 60.8%, for the three and nine month periods ended September 30, 2001, as compared to the corresponding periods of the prior year. These decreases resulted primarily from the sale of the Fund's RBM notes during April 2001, a decrease in the amount of the Fund's temporary and money market investments, and a decrease in the balance of the Niigata Engineering Co., Ltd. ("Niigata") receivables. The amount of the Fund's temporary and money market investments decreased because of cash distributions made by the Fund during February 2000 and May 2001 that constituted a return of capital, the Fund's repurchase of 9.31% of its Units during the fourth quarter of 2000, and operating losses incurred by the Fund. These decreases were partially offset by the proceeds received from the sale of the Fund's RBM investments during April 2001. The balance of the Niigata receivables decreased because of payments received from Niigata during May and November of 2000 and May 2001. Total expenses decreased $19,883 and $123,159, or 14.2% and 28.4%, for the three and nine month periods ended September 30, 2001, as compared to the corresponding periods of the prior year. These decreases resulted primarily from decreases in investment advisory fees, professional fees and other expenses. These decreases were partially offset by an accrual of liquidation expenses during the three months ended September 30, 2001. The Fund's obligation to pay the monthly investment advisory fees to FCM was subject to the Fund satisfying applicable subordination provisions as set forth in the Partnership Agreement. The investment advisory fees were not paid during 2000 due to the failure of the Fund to satisfy these subordination provisions. During March 2001, in connection with the adoption of the plan of liquidation for the Fund, FCM permanently waived its rights to receive any future investment advisory fees from the Fund, retroactive to January 1, 2000. As a result, the quarterly accruals for investment advisory fees that were made during 2000 were reversed as of December 31, 2000 and the Fund did not record any investment advisory fees during the nine months ended September 30, 2001. The decreases in professional fees and other expenses for the three and nine month periods ended September 30, 2001 resulted primarily from decreases in legal fees and other expenses incurred in connection with the Fund's investments in LMC. Realized Gain (Loss) on Investments On April 5, 2001, RBM (i) prepaid the $1,460,000 of RBM notes held by the Fund at par, plus accrued interest, and (ii) repurchased its common stock and warrants held by the Fund for $53,091. In the aggregate, the Fund realized a net loss of $2,576 from these transactions. Net Unrealized Gain (Loss) on Investments FCM values the Fund's portfolio investments on a weekly basis utilizing a variety of methods. For securities that are publicly traded and for which market quotations are available, valuations are set by the closing sales or an average of the closing bid and ask prices, as of the valuation date. Fair value for securities that are not traded in any liquid public markets or that are privately held are determined pursuant to valuation policies and procedures that have been approved by the Independent General Partners and subject to their supervision. There is a range of values that are 14 reasonable for such investments at any particular time. Each such investment is valued initially based upon its original cost to the Fund ("cost method"). The cost method is used until significant developments affecting the portfolio company provide a basis for use of an appraisal valuation. Appraisal valuations are based upon such factors as the portfolio company's earnings, cash flow and net worth, the market prices for similar securities of comparable companies and an assessment of the portfolio company's future financial prospects. In a case of unsuccessful operations, the appraisal may be based upon liquidation value. Appraisal valuations are necessarily subjective. The Fund also may use, when available, third-party transactions in a portfolio company's securities as the basis of valuation ("private market method"). The private market method is used only with respect to completed transactions or firm offers made by sophisticated, independent investors. As of December 31, 2000, the Fund had recorded $3,332,812 of unrealized loss on investments. The net decrease in unrealized loss on investments during the nine months ended September 30, 2001 and cumulative net unrealized loss on investments as of September 30, 2001 consisted of the following components:

Net Changes in Unrealized Gain (Loss) Net Unrealized During the ~~Six~~Nine Gain (Loss) Months Ended Recorded As of Portfolio Company ~~June~~September 30, 2001 ~~June~~September 30, 2001 ----------------------------------------------- ---------------------- ------------------ Unrealized losses recorded during prior periods with respect to investments disposed of during the ~~six~~nine months ended ~~June~~September 30, 2001 $ 2,576 $ -- LMC -- (2,008,442) ~~WasteMasters~~EESV -- (1,321,794) -----------~~-----~~ -----------~~-----~~ $ 2,576 $ (3,330,236) ===========~~=====~~ ===========~~=====~~

On April 28, 2000, LMC filed for Chapter 11 bankruptcy protection. On November 9, 2000, LMC's secured lender, CIT, repossessed LMC's assets that had been pledged as collateral on a line of credit (all of LMC's assets except for its real property). On January 17, 2001, CIT conducted a foreclosure sale of the repossessed assets. The proceeds of the foreclosure sale totaled less than the amount of LMC's indebtedness to CIT. On October 26, 2001, the Bankruptcy Court converted LMC's bankruptcy proceedings to a case under Chapter 7 of the United States Bankruptcy Code. LMC is currently attempting to sell its real property. All proceeds realized from the sale will be payable to LMC's creditors, including the Fund. The Fund wrote its LMC investment down to a negligible amount between 1995 and 2000. As of December 31, 2000, the Fund wrote the cost of all of its LMC equity investments off as realized losses. There is a possibility that the Fund could recover a small portion of its investment in LMC debt out of proceeds derived from the sale of LMC's real property. During June 1998, the Fund exchanged its Atlas Environmental, Inc. ("Atlas") subordinated notes and warrants for 989,414 shares of common stock in EESV (as a successor to WasteMasters, Inc.), a waste management company headquartered in El Reno, Oklahoma. The Fund's EESV stock, which was acquired from Nikko Trading of America Corporation ("Nikko"), was subject to a 24-month lock-up period through May 2000. Upon expiration of the 15 lock-up period, the Fund requested that EESV issue the Fund a new stock certificate without the restrictive legend that existed on the Fund's original certificate, so the stock could be sold. EESV refused to comply with this request because of a court order during March 2000 that authorized the cancellation of all EESV stock that had been issued to Nikko, including the shares that Nikko had previously transferred to the Fund. The Fund retained counsel and EESV's attorneys agreed to consider the Fund's request to be treated as a bona fide purchaser of the shares from Nikko. Others are in the same position as the Fund and have requested similar treatment. On October 12, 2001, EESV agreed to treat the Fund as a bona fide purchaser of the shares and to issue new restricted shares to the Fund, subject to execution of a definitive settlement agreement. The EESV common stock, which trades on the OTC Bulletin Board System ("EESV"), closed at $1.78 (an average of the closing bid and ask prices) on June 3, 1998 (the date of the exchange). However, due to a number of factors, including the speculative nature of the EESV stock, the two-year lock-up period and the relative size of the Fund's stock position, the Fund recorded the EESV stock at the same nominal value that the Atlas securities had previously been carried by the Fund. The Fund recorded a realized loss of $2,560,453 on the exchange, which is equal to the amount of the loss that the Fund claimed for income tax purposes from the disposition of the Atlas securities. The balance of the unrealized loss previously recorded by the Fund with respect to the Atlas securities continues to be carried by the Fund as an unrealized loss. The 52-week low and the current bid price (October 31, 2001) for the EESV common stock are $0.0125 and $0.014 per share, respectively. 16 Part II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits and Reports to be filed: Exhibit No. Description 11.1 Statement of Computation of Net Investment Income Per Limited Partnership Unit. 19.1 Reports Furnished to Securities Holders. (b) The Registrant did not file any reports on Form 8-K during the third quarter of the fiscal year ending December 31, 2001. 17 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Fiduciary Capital Partners, L.P. (Registrant) By: FCM Fiduciary Capital Management Company Managing General Partner Date: October 31, 2001 By: /s/ Donald R. Jackson ------------------------------------ Donald R. Jackson Chief Financial Officer 18 EXHIBIT INDEX

EXHIBIT ~~INDEX~~NUMBER ~~Exhibit~~DESCRIPTION ~~Number Description~~ ------- ----------- 11.1 Statement of Computation of Net Investment Income Per Limited Partnership Unit. 19.1 Reports Furnished to Securities Holders.

E-1

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